To help you navigate and mitigate supply chain risk and disruption, Inbound Logistics got some expert advice from Erika Melander, (pictured, left) manufacturing practice lead at Travelers, a 165-year-
way by the pandemic. These impacts to employees and customers also led to disruption. Maintaining a focus on pressure points across the entire spectrum is critical for every manufacturer. What specific steps can manufacturers take to reduce the potential for interruption of the flow of goods to customers? Start by conducting a thorough review of your suppliers. Consider their track record, financial resources, certifications, and business continuity plans. This can help you identify areas of vulnerability, which could potentially result in a delayed shipment. If you source critical components or materials from a single supplier, think about expanding your list to include a network of trusted backup suppliers. This can help protect you if your primary supplier experiences a disruption. You may also want to reevaluate the cost-benefit of using offshore supplier networks and weigh the benefits of bringing the supply chain closer to you, which could shorten delivery times and reduce inventory requirements. Be sure to also consider the geography and typical weather patterns within a supplier’s region. Next, look at your employees and the key roles they play. Many of them have specialized skills and cannot be easily replaced, especially given the tight labor market. To help minimize any production disruptions that could occur if any of your employees leave their roles or are injured, have plans in place for how you can find and attract qualified talent, appropriately onboard and train them, and keep them engaged. It is also important not to forget about your machinery. This is often highly specialized, which means there may be a long lead time for a replacement part if any piece of equipment breaks down. Creating a business continuity plan that includes critical machines is vital. Next, move downstream and look at the final leg of a product’s journey. To help reduce interruptions to the flow of goods to customers, think about ways to diversify distribution networks, and consider distribution partners who are investing in automation to accommodate the increased volume of e-commerce transactions. It is also important to think about inventory controls and cargo risks, since a lot can happen on a product’s journey to your customer, whether in transit or in storage. Finally, don’t forget about insurance, which can help protect assets and revenue along the supply chain.
old insurance company with offices in the United States, United Kingdom, Ireland, and Canada.
How has the COVID-19 pandemic affected the way manufacturers assess and manage risk? COVID-19 put a spotlight on the fragility of the supply chain. While we’ve seen severe weather, political disruption, economic turbulence, and other events lead to supply chain disruptions in the past, few, if any, have been as wide-reaching as this pandemic. What has been made clear is that even the companies with the best holistic risk management programs need to deal with the continuing changing nature of supply chain risk. At Travelers, we focus on analyzing risk so that we can help companies navigate and mitigate those threats. That is why we know it is so important for manufacturers to take a fresh look at supply constraints upstream, in-plant, and downstream and implement best practices to manage risks. To help manufacturers do this, Travelers offers a free Supply Chain Pressure Test. It is a quick questionnaire that can help uncover and avert potential supply chain risks before they emerge. By regularly assessing their risk landscape, manufacturers can make adjustments and take actions that can help them prepare more effectively for the next disruption. What should manufacturers keep in mind to limit supply chain vulnerabilities? It is important to focus on risks to the entire supply chain, not just upstream, because a break or stress in any part of the chain can result in an unexpected and costly business interruption. In the recent past, upstream supply bottlenecks have been widely reported. Two examples include when the Ever Given cargo ship was stuck in the Suez Canal, as well as the chip shortage in the auto industry. However, it is not just this end of the supply chain that demands focus. The in-plant and downstream segments can also affect a manufacturer’s business. Consider manufacturing plants that had to reduce output or shifts while they managed employee safety, or customers who canceled orders because they were affected in their own
January 2022 • Inbound Logistics 201
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